Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 30 September 2006, unaudited, and does not
include the Impax Environmental Markets
C Share which converted on 6 October 2006.

DATA AND PERFORMANCE


Data                              Pricing & Performance
                                                     IEM  MSCI  Impax
                                                     Net  World ET50
                                                    Asset
Share Price (pence)         104.5                   Value
Warrants (pence)             35.5
Total Fund Size (m)     GBP 132.2       Diluted NAV 100.4  n/a   n/a
                                            (pence)
Market                  GBP 136.7  Premium/discount +4.1
Capitalisation (m)                              (%)
Management fee (%)            1.0     Undiluted NAV 101.0
                                            (pence)
Established           22 February      Performance*
                             2002
Fund structure         Investment       1 month (%) +1.2  +2.9  +1.4
                            Trust
Number of stocks               75      3 Months (%) -2.0  +3.0  -2.1
held
Exchange                   London        1 year (%) +6.9  +6.2  +5.9
Currency                      GBP        3 year (%) +60.5 +34.3 +46.3
ISIN Number          GB0031232498  Year to date (%) +9.2  +0.4  +7.8
Sedol                     3123249
Reuters RIC Code            IEM.L
                                  * Performance data is for undiluted
Bloomberg Code             IEM LN NAV.


TOP TEN HOLDINGS


            Company Holding %                   Description   Country
          Itron Inc       3.0   Meters & utilities software        US
     Chloride Group       2.7                   UPS systems        UK
           LKQ Corp       2.7          Automotive recycling        US
                                   High efficiency electric
       Regal Beloit       2.5                        motors        US
Energy Developments       2.4     Landfill gas developments Australia
             Gamesa       2.4                          Wind     Spain
              Vacon       2.2             Power electronics   Finland
          Pall Corp       2.2                    Filtration        US
       Kurita Water       2.1               Water treatment     Japan
         Stericycle       2.1                Clinical waste        US

              Total      24.4


PORTFOLIO ANALYSIS*


Geographical            Company Size
North America      46%  >£500m          46%
Europe             49%  £100-500m       39%
Rest of the World   4%  <£100m          16%

Sectoral                Profitability
Energy             41%  Profitable      89%
Water              29%  Pre-Profitable  11%
Waste              30%
* of funds invested as of 30 September 2006













MANAGER'S COMMENTARY (September 2006)


The Company NAV  was up 1.2%  over the month  compared with the  MSCI
World, which rose  by 2.9%, and  the Impax ET50,  which increased  by
1.4% over  the same  period.   In the  broader markets,  telecom  and
consumer discretionary  stocks were  the  best performers,  with  the
energy sector  in general  underperforming  and energy  equipment  in
particular.

During the month, Governor  Schwarzenegger signed the Global  Warming
Solutions Act, a law requiring greenhouse gas emissions in California
to be reduced to 1990 levels by 2020.  Schwarzenegger is now planning
to meet with fellow Republicans, Governor Pataki and Mayor Bloomberg,
to discuss  the implementation  of California's  emissions  reduction
system in  a bid  to  lobby the  Federal  Government to  act  against
climate change.  US support  for climate change policy could  provide
strong impetus for  the alternative energy  sector.  Separately,  the
American Wind  Energy Association  announced  its belief  that  broad
support on Capitol  Hill will  lead to a  two year  extension of  the
production  tax  credit,  which  has  driven  record  growth  in  the
installation of US wind capacity.  In the water sector, the UK  Water
Services  Regulation  Authority   (Ofwat),  censured  companies   for
underspending by £1 billion  in the first year  of the £16.8  billion
five-year investment programme.  Water UK, which represents the water
companies, said it would justify price rises by delivering the agreed
investment by  2010.   Amid  continued interest  in the  sector,  Dow
Chemicals announced the formation of Dow Water Solutions, a  division
focusing on desalination  and water treatment.   The company  already
offers products in  reverse osmosis  and ion  exchange, and  recently
expanded  into  ultrafiltration,  electrodionization,  and   membrane
Bio-Reactors through the acquisition  of Zhejiang Omex  Environmental
Engineering in July.  During the month Siemens also gained a foothold
in the growing market for sustainable water treatment in China,  with
the acquisition  of  CNC  Water  Technology,  a  successful  membrane
filtration systems integrator.   In  the waste  sector, Severn  Trent
announced terms  for  the  demerger of  its  waste  business,  Biffa,
valuing the  asset at  the top  of the  range of  7-9x EV/EBITDA  for
European and US  listed waste companies.   The valuation  underscores
the attractive  nature of  these assets  and should  provide  further
support to the multiples at which comparable companies trade.

Stocks that contributed to the  increase in the company's NAV  during
September included Chloride (UPS, UK),  which gained 16% on  earnings
upgrades and takeover  speculation, and Pall  Corp (filtration,  US),
which increased by 13% on strong  results and upgrades.  In  addition
Plant Healthcare (biofertiliser, UK) rose 43% after successful  field
trials and  rumours of  a distribution  agreement.   On the  downside
Pentair (water treatment, US) declined by 12% on downgrades and fears
of a slowdown in  US construction.  PM  Group (weighing devises,  UK)
fell 48%  on  disappointing  results  and a  lack  of  visibility  on
spending for its WasteWeigh and BinWeigh products.


Latest information available at: www.impax.co.uk/asset/iemdown.htm

17 October 2006

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